Skully Founders Allegedly Used Funding As "Personal Piggy Banks"

A lawsuit filed by the CEO's former executive assistant calls the company "a sham."

Earlier this week, Skully, a promising San Francisco-based startup that claimed to build a better motorcycle helmet using augmented reality, informed customers that it was shutting down and filing for bankruptcy. According to TechCrunch, the closure came a couple weeks after the board of directors forced out Marcus and Mitch Weller, the brothers who cofounded Skully. A newly discovered lawsuit filed by the brothers' assistant may fill in some of the gaps.

The complaint alleges that the Wellers used Skully "as a tool to pay their personal expenses” and abused the company “in such a fraudulent manner it rendered the corporate entity a sham."

The lawsuit was filled late last month by Isabelle Faithauer, who describes herself as an assistant to the brothers; her responsibilities included "managing the books of Skully," under the Wellers' supervision. (Faithauer's LinkedIn profile describes her as the executive assistant to the CEO, Marcus Weller.)

Her complaint alleges that the Wellers “routinely demanded that Plaintiff engage in fraudulent bookkeeping practices designed to defraud investors," all while allegedly refusing to pay overtime or give her meal and rest breaks stipulated by California law.

Faithauer lists some of the alleged fraudulent bookkeeping that she was "required to generate, over her strong objections, in order to keep her job," including:

  • Rent for the brothers' personal apartments in the Marina
  • Security deposits for an apartment in Dogpatch used by the Wellers
  • Weekly apartment cleanings
  • Personal grocery bills for the Wellers
  • All restaurant meals for the brothers
  • Mitchell Weller's Dodge Viper, which was claimed for insurance following an accident, as well as the new Viper purchased by the company to replace it

Skully raised nearly $2.5 million in crowdfunding from IndieGogo in order to build helmets with a heads-up display, and claimed to raise an additional $11 million in subsequent rounds of venture financing.

TechCrunch, which obtained a copy of Skully's letter to customers, reported that filing for bankruptcy means that IndieGogo customers who haven't received their order, "likely won’t be getting a refund on pre-orders for the $1,500 AR helmet Skully was working on."

It is not clear how many helmets have been shipped. In July, TechCrunch reported between 20 and 100 orders. BuzzFeed News contacted the company for comment, but we haven't heard back.

During leadership upheaval last month, Skully's new CEO, Martin Fitcher, wrote a post to customers about delivering on promises. "I understand the burning question many customers are asking is: Will I get my helmet? The answer is yes," Fitcher said.

Skully raised 979 percent of its original crowdfunding goal, $250,000, from 1,940 people. Their best hope now may be Skully's competitor Fusar, another smart helmet company that also raised funding on IndieGogo. In an open letter to Skully customers, Fusar offered to provide credit to customers, albeit with a lot of fine print.

This story is developing and we will update the post as we learn more.

See a copy of the lawsuit here:

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